India Payments Market Size (2024 - 2029)

Payment in India Market Analysis

The India Payments Market size is estimated at USD 357.51 billion in 2024, and is expected to reach USD 814.43 billion by 2029, growing at a CAGR of 17.90% during the forecast period (2024-2029).

The primary factor driving the growth of the market in the region is the rising adoption of digital payments supported by government initiatives and strong growth in E-commerce, among others.

• The Indian payments market is evolving from cash as the primary mode of payment and usage of debit cards being limited to cash withdrawals to the digital payments system. The Indian payment market has evolved to widespread adoption of multiple payment products and systems like Prepaid Payment Instruments (PPIs), Quick Response (QR) code, Immediate Payment Service (IMPS), real-time payment system Unified Payments Interface (UPI), and Aadhar enabled Payment Service (AePS).
• Various initiatives by the Government of India, such as digital India, are further driving the adoption of digital wallets and digital payments in the region. Also, as per Union Budget 2022-23, to boost India's digital economy, the Reserve Bank of India (RBI) will be launching the Central Bank Digital Currency (CBDC) as India's official digital Rupee, which is further expected to strengthen the Indian payments market.
• Moreover, growth in digital payments in the region has been primarily driven by factors such as the launch of new and innovative payment products by the payment companies, the rising need for faster payment modes, and a strong push from the Government and regulators toward the adoption of digital channels.
• The Indian real-payment segment continuously witnessed substantial growth over the past few years. The Immediate Payment Service (IMPS) from the National Payment Corporation of India (NPCI) drives an ever-expanding suite of API-overlay services through the UPI. The Unified Payments Interface (UPI) is a payment system that powers various bank accounts into a single mobile application, merging several banking features, seamless fund routing and merchant payments into one hood. It also caters to the peer-to-peer collection request, which can be scheduled and paid as per requirement and convenience. Furthermore, Buy Now Pay Later real-time payments services have been rising for the past few years in the region.
• Banks are now more focused on providing integrated solutions for payment solutions to their consumers. Digital payments systems have evolved from being viewed as a cost center for banks to a revenue center and a key parameter for customer acquisition. Many banks in the region have introduced their own digital payment app to gain more customer acquisition, such as BHIM Axis Pay, Yono by SBI, HDFC PayzApp, Pockets By ICICI Bank, etc.
• However, failed transactions are increasing with the rising number of transactions and technical declines in the region. The rise in UPI payment transactions also tests the banking infrastructure and technological systems, which are not adequately equipped to handle the surge in volumes. The Reserve Bank of India, with the NPCI, is pushing the banks to reduce technical failures and work on a real-time system for handling customer complaints.
• During the COVID-19 pandemic, India has seen lockdowns across the country and cash payments declined during this period. However, even before the pandemic, the country was moving towards a cash-free society, and the pandemic further proliferated the move. Digital payments, app-based payments, and real-time payments grew in the region to avoid the physical contact spread of the virus during the outbreak.

Payment in India Industry Segmentation

The Indian payments market is segmented by mode of payment (point of sale (card payments, digital wallet, cash), online sale (card payments, digital wallet)), and by end-user industries (retail, entertainment, healthcare, hospitality). E-commerce payments include online purchases of both goods and services, such as purchases made on e-commerce websites and online booking of travel and accommodation. The scope of the market excludes online purchases of motor vehicles, real estate, utility bill payments (such as water, heating, and electricity), mortgage payments, loans, credit card bills, or purchases of shares and bonds. As for Point-of-Sale, all transactions that occur at the physical point of sale are included in the scope of the market. It includes traditional in-store transactions as well as all face-to-face transactions, regardless of the location of the transaction. Cash is also considered for both cases (cash-on-delivery for e-commerce sales).

The study tracks key market metrics, underlying growth influencers, and significant industry vendors, providing support for market estimates and growth rates in India throughout the anticipated period. The study looks at COVID-19's overall influence on the Indian payment ecosystem.